Caught red-handed? The US Secretary of Defense gets involved

Did the US Secretary of Defense try to translate the thundering drums of the Iran war into a profitable line in his private investment portfolio? A report by the “Financial Times”, which has stirred the corridors of Washington and the stock markets on Wall Street in recent hours, claims that Pete Hegseth, the most powerful man in the Pentagon and one of the closest to President Trump, is at the center of a potential “insider information” affair.

According to the report, which relies on sources privy to the details, a broker from the Morgan Stanley investment house working for Hesseth approached the financial giant Blackrock last February – only a few weeks before the start of the joint US-Israeli military operation against the Islamic Republic. The goal: a massive investment of millions of dollars in a basket fund. (ETF) which focuses on defense industries.

the fund in questionDefense Industrials Active ETF, It is nothing less than the “dream team” of the armaments world. It is a real financial monster that manages assets of a huge amount of about 3.2 billion dollars, whose entire purpose is to bet on the warming of the geopolitical sector. The fund concentrates under one roof the giants of armaments and military technology that earn their living directly from the Pentagon’s replica budgets, including names such as Lockheed Martin, Northrop Grumman, the missile giant RTX and the US intelligence-affiliated data analysis company, Palantir. Inside Blackrock, it was revealed, the contact turned on red lights and was flagged for an urgent internal review due to the identity of the customer.

Although over the past year the fund recorded an impressive jump of approximately 28% in value, precisely in the last month – with the outbreak of the war in Iran – it recorded a sharp drop of almost 13%. The latest figure shows that it is possible that the technical delay at Morgan Stanley, which prevented the actual investment from being made, actually spared Minister Hesseth heavy losses in the short term, even if he was unable to prevent the public uproar and the suspicion of a serious conflict of interest. However, the very attempt to make such a significant purchase of defense companies, just when Minister Hesseth is pushing the cabinet for an aggressive military move, raises serious questions about a conflict of interest.

There are no debtors left in the US Ministry of Defense. The main speaker, Sean Parnell, went on a frontal attack online X (former Twitter) and called the report “completely false and fabricated from the ground up”. According to him, “This is another dishonest slander designed to mislead the public. Neither Minister Hesseth nor any of his representatives contacted Blackrock regarding such an investment”.

Despite the sweeping denials, the timing could not have been worse for the administration. The financial markets are already under a magnifying glass after unusual movements were recorded in oil futures and the index in recent weeks-S&P 500 – A few minutes before dramatic announcements by President Trump.

Hesseth, who came to the position straight from the “Fox News” studios, is considered one of the strongest voices in the administration in favor of an attack on Iran. Previous reports revealed that between 2022 and 2024 he earned approximately $4.6 million from his media work, in addition to millions of dollars in royalties and advances from his books. In June 2025, it was revealed that Heseth sold shares in 29 different companies, a move ostensibly intended to prevent conflicts of interest, but the current report threatens to crack the clean image he is trying to maintain.

The irony in the story is that the technical delay at “Morgan Stanley” may have saved the minister’s money. But in Washington they understand that the public damage – the suspicion that the exploitation of classified security information was used for personal enrichment – could be much more deadly than a financial loss in the capital market.