Iran pre-war purchase of millions of dollars worth of military stocks? Media expose U.S. Defense Secretary's "insider trading"

Ask AI · How Did Hegseth’s Pre-War Investment Attempts Uncover Potential Conflicts of Interest?

The broker of U.S. Secretary of Defense Pete Hegseth tried to make a major investment in major defense companies in the weeks before the U.S. launched attacks on Iran together with Israel.

According to the latest report from the British Financial Times, three people with knowledge of the matter said that in February this year—just before the U.S. took military action against Iran—Hegseth’s broker at Morgan Stanley reached out to the asset-management giant BlackRock to discuss investing millions of dollars in its “Defense Industrials Active ETF” (IDEF fund).

The people with knowledge said the inquiry raised alarms within BlackRock because it involved a well-known potential client. BlackRock, Morgan Stanley, and the Pentagon have all declined to comment for now. Although the deal ultimately fell through, with the defense secretary planning a large-scale military operation while his account tried to overweight defense stocks, it would undoubtedly spark significant controversy.

Investment fell through: platform restrictions unexpectedly “provided a safe haven”

The millions of dollars investment ultimately did not go through. The reason was that the fund, which was only launched in May last year, was not yet available for purchase by Morgan Stanley’s clients at the time.

While the ETF was designed to be as easy to buy and sell as a stock, because there are now more than 14,000 ETFs in the market, most major brokerage and trading platforms only offer a subset of them.

It is still unclear whether Hegseth’s broker later found other defense-focused replacement funds to invest in.

Interestingly, the collapse of this deal instead helped Hegseth avoid short-term losses. The IDEF fund, which is listed on Nasdaq, rose by 28% over the past year, but it did not climb because of the war in the Middle East; instead, it fell by nearly 13% over the past month.

Conflict of interest focus: overweighting defense contractors

According to BlackRock’s fund materials, the $3.2 billion IDEF fund aims to “seek growth opportunities by investing in companies that may benefit from increased government defense and security spending amid geopolitical fragmentation and heightened economic competition.”

The fund’s largest holdings include defense industry groups such as RTX, Lockheed Martin, and Northrop Grumman. Notably, the biggest customers of these companies are the U.S. Department of Defense. Data integration expert Palantir is also among the fund’s major holdings.

Hegseth is one of the principal plotters of the war with Iran. He is also one of the most outspoken advocates in the Trump administration for taking action against Iran, and he often boasts about the strength of the U.S. military. U.S. President Donald Trump previously noted that this former Fox News television personality was the first person to push for war within his national security circle.

Financial situation exposed: high pay and frequent trading

Hegseth’s financial situation also came to light through disclosure forms submitted for his Senate confirmation hearing.

During his time at Fox News (2022 to 2024), Hegseth received $4.6 million in salary. In addition, over these years he received nearly $500k in advance payments for two books, with royalties for each book ranging from $100k to $1 million. His speaking fees also totaled nearly $900k.

The latest financial disclosure released in June 2025 shows that this defense secretary sold the stocks of 29 different companies, with each transaction valued between $1,001 and $50,000.