Warren, Blumenthal, Duckworth, Peters, Merkley Press Hegseth on Reported Attempts to Make Investments in Defense Firms Ahead of Iran War; Slam Potential Conflict of Interest,[...]

Warren, Blumenthal, Duckworth, Peters, Merkley Press Hegseth on Reported Attempts to Make Investments in Defense Firms Ahead of Iran War; Slam Potential Conflict of Interest, Violations of Federal Ethics Agreement

Defense Secretary Pete Hegseth's broker reportedly attempted to invest in major defense companies in weeks leading up to Trump's attack on Iran

"This would be a…betrayal of the nation paying the price for this war and the troops you are sending into harm's way."

Text of Letter (PDF)

Washington, D.C. - After new reports revealed that Defense Secretary Pete Hegseth's broker reportedly attempted to make major defense investments ahead of Trump's attacks on Iran, U.S. Senators Elizabeth Warren (D-Mass.), Tammy Duckworth (D-Ill.), and Richard Blumenthal (D-Conn.), all members of the Senate Armed Services Committee; along with Senator Gary Peters, Ranking Member of the Senate Committee on Homeland Security & Governmental Affairs; and Senator Jeff Merkley (D-Ore.), pressed Hegseth on what appears to be a major conflict of interest and possible violation of his federal ethics agreement.

"This would be a profound conflict of interest and a potential violation of your federal ethics agreement - and betrayal of the nation paying the price for this war and the troops you are sending into harm's way," wrote the lawmakers.

Ahead of Trump's strikes on Iran, Hegseth's broker at Morgan Stanley reportedly contacted BlackRock about making a multimillion-dollar investment in the asset manager's Defense Industrials Active ETF. The request was reportedly significant enough to trigger an internal flag at BlackRock.

"If this report is accurate, it would appear to represent an appalling effort to profit off of your knowledge of the President's plans for war," wrote the lawmakers.

Presidentially appointed, Senate-confirmed Department of Defense officials like Hegseth are prohibited from "owning or purchasing the publicly traded stock of a company if that company is one of the 10 entities awarded the most amount of contract funds by the Department of Defense in a fiscal year during the five preceding fiscal years." In 2026, Hegseth was specifically prohibited from owning any stock in Lockheed Martin, Northrop Grumman, General Dynamics, Huntington Ingalls, Boeing, RTX Corporation, and L3Harris Technologies, all companies currently included in BlackRock's Defense Industrials Active ETF.

Guidance from the Office of Government Ethics warns that sector funds focused on a single industry can create a liability for government officials under the criminal conflict of interest statute. The law and Department of Defense policy are clear that DoD personnel must continuously monitor and prevent conflicts of interest.

"In your ethics agreement, you said that you would 'ensure' that any investment professional you use 'obtains my prior approval on a case-by-case basis for the purchase of any assets other than cash, cash equivalents, investment funds that qualify for the regulatory exemption for diversified mutual funds and unit investment trusts at 5 C.F.R. § 2640.201(a), obligations of the United States, or municipal bonds,'" wrote the lawmakers. "Since this was a multi-million dollar investment in a sector-specific fund, your agreement appears to indicate that your broker would have needed your approval or that you did not intend to meet the commitments you made in your ethics agreement."

"The American people deserve leaders they can trust to put national security ahead of their own financial self-interest," continued the lawmakers. "If the recent reports are accurate, we now know that, behind closed doors, you were setting yourself up to profit from your ownership of stock in multiple defense contractors."

The Trump administration's illegal war against Iran is costing taxpayers roughly $1 billion a day. Meanwhile, defense contractor stocks jumped at the start of the war and will likely continue to climb as they stand to profit from a $1.5 trillion budget request and an expected $200 billion supplemental war request, in addition to significant new demand in response to the geopolitical chaos.

The lawmakers pressed Hegseth for critical information on this apparent conflict of interest by April 15, 2026.

###