US Defense Secretary Hegseth's broker looked to buy defense fund before Iran attack

PHOTO CAPTION: Illustrative file photo — U.S. Secretary of Defense Pete Hegseth holds a briefing amid the U.S.-Israeli conflict with Iran, at the Pentagon in Washington, D.C., U.S., March 2, 2026. (REUTERS/Elizabeth Frantz)

A broker for U.S. Defense Secretary Pete Hegseth attempted to make a big investment in major defense companies in the weeks leading up to the U.S.-Israeli attack on Iran, the Financial Times reported on Monday, citing three people familiar with the matter.

Chief Pentagon spokesman Sean Parnell said on X the story was "entirely false and fabricated" and demanded a retraction.

The FT report said Hegseth's broker at Morgan Stanley contacted BlackRock in February, about making a multimillion-dollar investment in the asset manager's Defense Industrials Active ETF, shortly before the U.S. launched military action against Tehran. 

According to the FT report, the investment discussed by Hegseth’s broker did not ultimately go ahead as the fund, which launched in May last year, was not yet available for Morgan Stanley clients to buy. 

The FT report did not say how much discretion the broker had to make investments on Hegseth's behalf, or whether Hegseth knew what the broker was doing.

"Neither Secretary Hegseth nor any of his representatives approached BlackRock about any such investment," Parnell said.

BlackRock declined to comment on the report, while Morgan Stanley did not immediately respond to Reuters' request for comment. 

The report on the investment attempt comes amid a wider scrutiny of trades made in financial and prediction markets ahead of U.S. President Donald Trump's major policy decisions. 

Some of these decisions have been preceded by well-timed bets, leading some experts to raise questions about whether information had somehow leaked ahead of time. 

 (Reporting by Akanksha Khushi in Bengaluru; Editing by Chris Reese and Stephen Coates // REUTERS)