Senators demand answers from Hegseth on defense investment probe

A group of Senate Democrats is demanding more information about Defense Secretary Pete Hegseth’s finances and investments after reports — which the Pentagon demanded be withdrawn — that he may have tried to invest in defense stocks before the war in Iran began nearly five weeks ago.

“If this report is accurate, it represents a sinister attempt to profit from your knowledge of the President’s plans for war,” Democratic Sens. Elizabeth Warren, Richard Blumenthal, Tammy Duckworth, Ed Markey and Gary Peters wrote in a letter to Hegseth — and was provided exclusively to ABC News Wednesday night. “This would be a profound conflict of interest and a potential violation of your federal ethics agreement — and a betrayal of the nation that pays the price for this war and the troops you are sending into harm’s way.”

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The Financial Times reported earlier this week that a broker for Hegseth at Morgan Stanley approached BlackRock — an equity fund — and tried to invest hundreds of millions of dollars in the fund with defense stocks weeks before the Iran war.

The investment hasn’t gone ahead because it’s not yet available to Morgan Stanley clients, the Financial Times reported — it’s unclear whether Hegseth’s broker has found another defense fund to invest in.

ABC News has not independently confirmed the Financial Times report.

When approached by ABC News, Morgan Stanley and BlackRock declined to comment on the Financial Times report.

In a post on X On Monday, Sean Parnell, the Pentagon’s chief spokesman, dismissed the report as “completely false and fabricated” and demanded a retraction from the Financial Times.

Still, Democratic senators, led by Warren, a member of the Armed Services Committee, said in a letter that if the report is true, it would be a “serious breach of public trust” and a violation of the ethics agreement he signed before his confirmation as defense secretary.

“The American people deserve leaders they can trust to put national security ahead of their economic interests,” the senators wrote to Hegseth.

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Hegseth is prohibited under Defense Department conduct standards from owning stocks in 10 large industry-specific corporations, including Lockheed Martin, Northrop Grumman, General Dynamics, Huntington Ingalls Industries, Boeing, RTX Corp. and L3 Harris, which is part of the fund, Financial Times claimed.

Hegseth has no major holdings in defense companies, according to his most recent financial disclosures reviewed by ABC News.

“Because this is a multi-million dollar investment in a sector-specific fund, your agreement appears to indicate that your broker does not intend to require your approval or fulfill the commitments you made in your ethics agreement,” the senators wrote.

Senators have asked Hegseth to answer a number of questions about the Financial Times report.

They ask Hegseth to share any information about the pending military action with his broker or whether he instructed his broker to invest in any defense-related funds, including BlackRock, before the Iran war, according to a Financial Times report. They also ask what instructions Hegseth gave his broker to try to avoid a conflict of interest in accounting for defense stocks owned and sold by Hegseth and his wife.

In his statement, Parnell said Hegseth and the Defense Department “remain steadfast in their commitment to high ethical standards and strict adherence to all applicable laws and regulations.”

The senators say getting their questions answered will help them “understand where there may be gaps in current department practices and policies to prevent conflicts of interest.”

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House Democrats are also looking into the allegations made about Hegseth in the Financial Times report.

The top Democrat on the House Oversight Committee, Rep. Robert Garcia announced on Tuesday that he would open an investigation into the matter.

Republicans have not publicly commented on the Financial Times report. ABC News reached out to Senate Armed Services Committee Chairman Roger Wicker for comment about the Democrats’ call for an investigation, but did not receive a response.

ABC News’ Elizabeth Schulze and Lauren Paylor contributed to this report