SEC Faces Calls to Probe Defense Secretary Pete Hegseth Over Alleged Iran War Stock Trades

Last month, a Financial Times report raised serious questions about whether Defense Secretary Pete Hegseth used advance knowledge of the Iran war to expand his stock portfolio. The report, based on three anonymous sources, alleged that Hegseth’s Morgan Stanley broker contacted BlackRock in February to request a “multimillion-dollar investment” in the asset manager’s Defense Industrials Active ETF.

An ETF (exchange-traded fund) is a financial instrument that bundles multiple stocks and bonds into a single tradable asset. According to the Financial Times, BlackRock internally flagged the request, likely due to concerns over potential insider trading. The asset manager ultimately denied the request on the grounds that its Defense Industrials Active ETF was not yet available to Morgan Stanley clients.

Whether Hegseth found alternative means to profit from the Iran war remains unclear. A Pentagon spokesperson dismissed the report as “entirely false and fabricated”, stating that neither Hegseth nor any of his representatives approached BlackRock.

Senator Elizabeth Warren Demands SEC Investigation

This matter, the Pentagon’s denial notwithstanding, warrants immediate scrutiny by the Securities and Exchange Commission (SEC). Today, Senator Elizabeth Warren (Democrat, Massachusetts) sent a letter to SEC Chair Paul Atkins, urging an investigation into the allegations.

The Financial Times report has not dominated headlines in recent weeks, but it has not been forgotten by congressional Democrats. The day after the story broke, House Committee on Oversight and Reform ranking member Representative Robert Garcia (Democrat, California) and Subcommittee on Military and Foreign Affairs ranking member Representative Suhas Subramanyam (Democrat, Virginia) sent Hegseth a letter demanding he preserve “all documents, records, and communications” related to his financial transactions dating back to November 1, 2024.

However, an investigation by the committee is unlikely, as its chair, Representative James Comer (Republican, Kentucky), has been criticized for partisan bias. Notably, Comer is currently defending Pam Bondi for evading a committee subpoena in the Jeffrey Epstein investigation, despite previously voting to hold the Clintons in contempt for defying subpoenas in the same case.

Legal Violations and Ethical Concerns

Two days after the Financial Times report, Warren and three other Democratic members of the Senate Armed Services Committee sent Hegseth a letter highlighting that, even in peacetime, federal law prohibits him from owning stocks in major defense contractors. The letter stated:

“Even in peacetime, Hegseth would be prohibited by federal law from owning any stock in Lockheed Martin, Northrop Grumman, General Dynamics, Huntington Ingalls, Boeing, RTX Corporation, and L3Harris Technologies.”

These companies’ stocks were reportedly included in the ETF his broker attempted to purchase. Owning such an ETF would be illegal for Hegseth, as he serves as the Secretary of Defense.

In her latest letter to the SEC, Warren emphasized that a failure to investigate these allegations would undermine “the confidence investors have in the integrity of our financial markets.”