The Department of Defense has issued a denial following a report alleging that a broker for Secretary Pete Hegseth attempted to move millions into defense stocks just weeks before the U.S. launched military operations against Iran.

‘Entirely False And Fabricated’

Chief Pentagon Spokesman Sean Parnell took to social media early Tuesday to denounce the allegations made in a Financial Times report, characterizing it as a coordinated disinformation effort.

“This allegation is entirely false and fabricated,” Parnell stated. “Neither Secretary Hegseth nor any of his representatives approached BlackRock about any such investment. This is yet another baseless, dishonest smear designed to mislead the public.”

The spokesperson further demanded an “immediate retraction,” asserting that the Secretary remains in “strict adherence to all applicable laws and regulations” regarding personal ethics and financial disclosures.

Benzinga also reached out to the Pentagon but did not receive an immediate response.

The Alleged Transaction

The controversy stems from a report claiming a Morgan Stanley (NYSE:MS) wealth manager contacted BlackRock Inc. (NYSE:BLK) in February seeking a multimillion-dollar position in the iShares Defense Industrials Active ETF (NASDAQ:IDEF).

The fund’s primary holdings include major government contractors such as Lockheed Martin Corp.(NYSE:LMT), RTX Corp. (NYSE:RTX), and Northrop Grumman Corp. (NYSE:NOC)—firms that stand to see significant activity amid the ongoing war.

According to the Financial Times, the trade was reportedly “flagged internally” by BlackRock and ultimately did not proceed because the specific fund was not yet available on the Morgan Stanley platform.

Growing Conflict

The timing of the alleged inquiry is particularly sensitive. Hegseth, a key architect of the current U.S. campaign in Iran, was reportedly pushing for military action at the same time the broker was allegedly seeking the investment.

While the IDEF fund has dropped 12.42% over the last month as the war intensified, the mere suggestion of “war profiteering” has sparked a firestorm in Washington.

As the war against Iran enters its fifth week, the Pentagon maintains that the Secretary's focus remains solely on the mission, dismissing the financial allegations as a distraction from national security priorities.

Defense ETF Edge’s Up In 2026

While the iShares Defense Industrials Active ETF rose just 1.15% year-to-date, it still outpaced the Nasdaq Composite index, which has declined by 10.51% in the same period.

The ETF was down 1.19% over the last six months and up 23.69% over the year.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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