Recent convulsions in financial markets have political analysts concerned that high-placed members of the Trump Administration are making illegal trade moves based on insider information. And now Defense Secretary Pete Hegseth has been accused of trying to make a big investment in major defense cont ractors in the weeks leading up to the U.S.-Israeli attack on Iran. According to a bombshell report by the Financial Times on Monday, a stockbroker for Hegseth at Morgan Stanley contacted BlackRock in February about making a multi-million-dollar investment in the asset manager’s Defense Industrials Active ETF shortly before the U.S. launched strikes against Tehran on Feb. 28, three people familiar with the matter said. US Secretary of Defense Pete Hegseth speaks during a press briefing at the Pentagon in Washington, DC, on March 31, 2026. (Photo by Oliver Contreras / AFP via Getty Images) “The investment discussed by Hegseth’s broker did not ultimately go ahead as the fund, which launched in May last year, was not yet available for Morgan Stanley clients to buy it,” the Times reported. “It is not known whether Hegseth’s broker subsequently found an alternative defense-focused fund to make the investment.” ETFs (exchange-traded funds) contain groups of investments, such as stocks and bonds, organized around a strategy, theme, or risk exposure, Fidelity explains. Unlike bond funds, ETF prices change throughout the day, providing liquidity and flexibility. ‘He’ll Be Fired’: Pete Hegseth Squirms as Trump Goes Off Script to Humiliate Him — Setting Him Up to Take the Fall Over Iran War BlackRock says its $3.2 billion defense-oriented ETF pursues “growth opportunities by investing in companies that may benefit from increased government spending on defense and security amid geopolitical fragmentation and economic competition.” Among its largest holdings are U.S. Department of Defense contractors RTX, Lockheed Martin and Northrop Grumman. As it turned out, Hegseth would not have profited from investing in the fund, analysts say. Though the Nasdaq-traded ETF has risen in value by 28 percent over the last year, its value has fallen by almost 13 percent over the past month as the Middle East war has escalated.“Truly shocking for the Secretary of Defense to trade f—— stocks and (attempt to) profit off of a war he helped start,” Tommy Vietor, co-host of “Pod Save America,” posted on X. “Firing this drunk idiot is the bare minimum. @PeteHegseth should be prosecuted.” Pentagon spokesman Sean Parnell demanded an “immediate” retraction of the reporting on Hegseth’s alleged trading inquiries by the Financial Times on Monday. “This allegation is entirely false and fabricated,” he wrote in a post on social media. “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 report comes amid scrutiny of uncannily well-timed trades in financial and futures markets that have prompted speculation that people with insider knowledge may be profiting off President Trump’s war plans. Less than two weeks ago, Trump threatened to “obliterate” Iran’s power plants if the Tehran regime didn’t open the Strait of Hormuz, observed The New Yorker. Oil prices, already elevated, rose further.On Monday, March 23rd, at 6:49 a.m. EST, there was a sudden surge of trading in the futures markets. Roughly 6,200 oil-trading contracts worth $580 million changed hands. Trading volumes for the SP 500 stock index, which had been depressed since the war began, also spiked moments later, which meant that “any potential insider got upside on both ends,” Fortune noted.Then, shortly after 7 a.m., the President announced on Truth Social that the United States and Tehran were engaged in talks about a “COMPLETE AND TOTAL RESOLUTION OF OUR HOSTILITIES IN THE MIDDLE EAST.” Trump said that he’d ordered the Pentagon to postpone any strikes for five days. The market’s reaction to the pause in Trump’s ultimatum was immediate, The New Yorker reported. The price of crude oil plunged by more than ten percent. Stock futures jumped about 2.5 percent. “Whoever sold oil futures and bought stock futures had made a lot of money in a short time,” the magazine observed. “Was this just a fortuitous set of trades? Or was it insider trading by someone, or a group of people, or an institution, that had been alerted in advance to Trump’s reversal?” “The question is always: What are the odds they just happened to trade at the right time and got lucky?” Ben Schiffrin, a former attorney at the Securities and Exchange Commission, which investigates insider trading in stocks, told The New Yorker. “Granted the timing of the trades and the sizes of the positions, it certainly raises the question.” It is not yet known who was behind the timely trades.“Who was it? Trump? A family member? A White House staffer? This is corruption. Mind-blowing corruption,” Democratic Sen. Chris Murphy wrote on X.Nobel Prize-winning economist Paul Krugman called it treason.“We have another word for situations in which people with access to confidential information regarding national security — such as plans to bomb or not bomb another country — exploit that information for profit,” Krugman wrote in a Substack post on Tuesday. “That word is treason.”The White House responded that federal employees are barred from profiting from nonpublic information, and added, “Any implication that Administration officials are engaged in such activity without evidence is baseless and irresponsible reporting.”Over 40 Democratic lawmakers, led by Sen. Elizabeth Warren, on Sunday urged the Commodity Futures Trading Commission (CFTC) and the Office of Government Ethics (OGE) in a letter to investigate potential insider trading by federal employees. They pressed the agency to “ensure that federal employees understand existing restrictions on prediction market insider trading,” The Hill reported.“In short, given the exponential growth in prediction market trading, rising evidence suggesting possible governmental insider trading in prediction markets, and potential confusion surrounding existing law in this area, we ask that the CFTC and OGE issue guidance reminding federal employees of their existing legal obligation to refrain from using their insider governmental information to profit from prediction market trades,” the legislators wrote.“It’s not fair for anyone, especially federal officials, to use inside information when betting on prediction markets,” Warren told NBC News. “Donald Trump’s CFTC shouldn’t let public officials get away with rigging prediction markets against working people.” ‘This Is Mind-Blowing Corruption’: Trump Administration’s Apparent Moves to Manipulate Financial Markets Have Dems and Other Critics Calling for Insider Trading Investigation ...read more read less