Pete Hegseth’s Broker Tried to Buy Defence Fund Before Iran Attack. Here's Why This is a Problem
New Delhi: A broker acting for US defence secretary Pete Hegseth tried to make a major investment in defence companies shortly before the US and Israel jointly attacked Iran on February 28, the Financial Times has reported on the basis of inputs from three people familiar with the matter.
In February, Hegseth's broker at Morgan Stanley contacted the asset managing behemoth BlackRock, about placing a multimillion-dollar investment in its Defense Industrials Active ETF. The inquiry came just weeks before the US announced the strikes on Tehran in the middle of what Iran's leadership has claimed were advanced peace talks.
The Defense Industrials Active ETF is a $3.2-billion equity fund which pursues “growth opportunities by investing in companies that may benefit from increased government spending on defense and security amid geopolitical fragmentation and economic competition," according to BlackRock. The fund has risen 28% over the past year, but not since the West Asia war, falling almost 13% in the past month.
The approach, made on behalf of a "high-profile potential client," was significant enough to be flagged internally at BlackRock, the report said, quoting sources. While there is no indication that the investment was completed, the timing of the inquiry has drawn attention given the proximity to the military action, which naturally affects defence sector valuations.
All parties involved – BlackRock, Morgan Stanley and the Pentagon – declined to comment on the matter. The episode raises serious questions about the intersection of high-level government roles and financial activity linked to sectors that could be directly influenced by geopolitical developments.
The Trump administration has insisted that progress is being made in talks with Iran while Trump himself has threatened to escalate the war in his latest social media post which happened to be laden with profanity. Hegseth is one of the chief architects of this war, and has frequently communicated communally-charged rhetoric in support of US soldiers.
He was last in the news for ousting the US Army’s top uniformed officer General Randy George and two other generals, General David Hodne and Army Major General William Green, last week without giving a reason for the departures.
Hegseth also removed the suspensions of the Army pilots who hovered two helicopters near Republican musician Kid Rock’s Tennessee home during a training run while he clapped and saluted. “No punishment. No Investigation. Carry on, patriots,” Hegseth had said in a social media post.
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