Last month, I considered whether Defense Secretary Pete Hegseth used what he knew about the imminence of the Iran war to expand his stock portfolio with a little blood money (“Is Pete Hegseth Killing Iranians To Get Rich?”). That was the thrust of a shocking Financial Times report, based on three anonymous sources, that said Hegseth’s Morgan Stanley broker approached Black Rock in February about making a “multimillion-dollar investment in the asset manager’s Defense Industrials Active ETF.” An ETF, or Exchange-Traded Fund, is a financial instrument comprised of multiple stocks and/or bonds that are bundled together and sold as a single stock.
According to the FT, Hegseth’s broker’s request was flagged internally at Black Rock, presumably because it so obviously threatened to trigger an insider-trading investigation. (I’m guessing the FT’s three sources all worked at Black Rock.) Ultimately, Black Rock denied the request on the technicality that its Defense Industrials Active ETF was not yet available to Morgan Stanley clients. Whether Hegseth found some other way to profit from the Iran war remains an open question. (A Pentagon spokesperson called the FT report “entirely false and fabricated” and denied that Hegseth or any Hegseth representative approached Black Rock.)
This is a matter that demands immediate investigation by the Securities and Exchange Commission, and this morning Senator Elizabeth Warren, Democrat of Massachusetts, sent SEC chair Paul Atkins a letter requesting him to do just that.
It says a lot about our current scandal-rich environment that the FT story hasn’t dominated the news these past three weeks. But congressional Democrats certainly didn’t forget it. The day after the story broke, the House Committee on Government and Oversight Reform’s ranking member, Rep. Robert Garcia of California, and the ranking member of its Subcommittee on Military and Foreign Affairs, Rep. Suhas Subramanyam of Virginia, sent Hegseth a letter instructing him to preserve “all documents, records, and communications” on his financial transactions back to November 1, 2024. Regrettably, no investigation by their committee is likely, because its chair, James Comer of Kentucky, is perhaps the most shamelessly partisan hack in the entire Republican House majority. As I write, Comer is trying to justify Pam Bondi’s evading a committee subpoena in its Jeffrey Epstein investigation despite the fact he previously voted to hold the Clintons in contempt for defying committee subpoenas in the same investigation.
Two days after the FT story broke, Senator Elizabeth Warren of Massachusetts and three other Democratic members of the Senate Armed Services Committee pointed out, in a letter to Hegseth, that 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.” Stakes in all of these companies were bundled into the ETF his broker reportedly tried to buy. It would be illegal for Hegseth to buy a Defense Industrials Active ETF because—duh—these are defense companies, and Hegseth is the Secretary of Defense.
In her new letter, Warren observes that failure on the SEC’s part to investigate the FT allegations would undermine “the confidence investors around the world place on the integrity of our markets.” Granted, Hegseth’s broker was not able, the FT reported, to complete the offending insider trade. But securities law, Warren points out, doesn’t just ban securities fraud; it also bans attempted securities fraud. The relevant language is “Whoever knowingly executes, or attempts to execute” [italics mine] the fraud in question.
If the FT story is true (and I think probably it is), why would Hegseth do anything so very stupid? If I’m right that the FT’s three sources were all at Black Rock, it shouldn’t be hard for a determined investigator to locate them. Also, if Hegseth’s request was flagged internally at Black Rock, that probably means there’s a paper trail just waiting for some government official to subpoena. Even if Hegseth defied Garcia and tossed all communications with his broker into a bonfire, he’d still be screwed. This is not a difficult investigation. So, I ask again: How could Hegseth be so stupid?
One answer is that Hegseth has already given us plenty of reason to believe he’s a few sandwiches short of a picnic. The most hilarious recent example (there are many) was Hegseth’s recitation last week of Scripture that turned out to be a fictional embellishment memorably recited by Samuel L. Jackson before he blows a few yuppie deadbeats’ brains out in the great Quentin Tarantino film Pulp Fiction. Thank goodness Hegseth skipped the part where Jackson asks the yuppies whether they think his employer, the terrifying mob boss Marcellus Wallace, looks like some sort of bitch.
But another, less obvious factor, is that Hegseth’s personal finances look a bit shaky. Hegseth’s salary as defense secretary is about $250,000, or $21,000 per month. Out of that $21,000, according to Forbes, Hegseth and his wife must pay a mortgage of $19,000 per month for a house in Tennessee—actually a 77-acre estate—that they bought in 2022 for $3.4 million. That leaves—can this be right?—$2,000 per month to cover all other expenses, and that’s not counting paycheck deductions for taxes and benefits. But it’s a really great house! According to Forbes’s Kyle Khan-Mullins, it’s situated 25 miles north of Nashville, has 6,900 square feet, and includes “a 5-car garage, a pool, a theater room, and a 960-square-foot, two-bedroom guest unit.”
Now you’re going to tell me none of this matters, because Hegseth entered the Trump administration a rich man. A $3.4 million house should be no stretch for a guy whom Fox paid, during the three years before he entered Trump’s Cabinet, $4.6 million. Hegseth also raked in more than a million per year through book advances, royalties, and speaking fees. But in spite of all that, Hegseth doesn’t seem to have much of a cushion. The giveaway is that $19,000 per month mortgage. A payment that big means the size of your loan exceeds the $750,000 cap on mortgage interest deductibility, driving up your tax bill, and you know how much Republicans hate to pay taxes. If Hegseth is paying $19,000 per month, that means that when he bought his house four years ago he was unable to make an appropriately large down payment. And indeed, according to Forbes, Hegseth’s net worth turns out to be only about $3 million, of which $2 million appears to come from his wife, Jennifer Rauchet. If, after being a TV personality for more than a decade, you end up with an individual net worth of only $1 million, then something must have gone wrong.
What went wrong?
Alimony appears to be at least part of the answer. Hegseth is twice-divorced, and (again, according to Forbes) just one of these divorces, from Samantha Deering, has cost him $1.3 million in alimony, child support, and private school tuition. Hegseth also paid $50,000 to settle allegations (that he denied) that he committed sexual assault in 2017.
A major theme of Hegseth’s life before entering the Pentagon was chaos. He left two organizations he ran—Concerned Veterans for America and Vets for Freedom—amid accusations of financial mismanagement, much of it said to be fueled by boozing and partying. CBS News reported in December 2024 that tax filings for Concerned Veterans of America showed that in fiscal year 2013 the nonprofit brought in $3.8 million but spent $3.9 million.
“There’s a long pattern,” one Hegseth associate told The New Yorker’s Jane Mayer in December 2024, “over more than a decade, of malfeasance, financial mismanagement, and sexual impropriety. There’s a fair dose of bullying and misinformation, too.” Don’t forget that in 2019 Hegseth’s mother emailed him that he was “an abuser of women … We are broken by your behavior and lack of character.” It would be a surprise if none of this mayhem showed up in his personal finances.
Logically, a person whose individual net worth is $1 million would be in no position to invest “millions” in anything—even an ethical financial venture. But he might consider doing so if he were feeling desperate and wanted to make a Hail Mary pass. What little we know of Hegseth’s finances suggests that’s possible.
Hegseth might especially consider this sort of reckless move after a few drinks. That may sound like a cheap shot, but the New York Post reported earlier this month that Hegseth’s top aide, former Marine Lt. Col. Ricky Buria, told Pentagon colleagues that he went with Hegseth, in disguise, on a secret bender last year at the Ritz-Carlton in Pentagon City. Multiple sources told the Post that this was Buria’s clumsy attempt to ensnare leakers. But that would be a really clumsy attempt, because Buria set the trap on at least two colleagues. If one of them leaked, how would Buria know which it was?
One of the Post’s two sources on Buria mouthing off said he (or she) thought maybe Buria made the story up to advertise his closeness to Hegseth. That would be pathetic, but not unprecedented. In Washington, aides have been known to show off what big shots they are by boasting about catching a president’s cold. A Pentagon spokeswoman told the Post: “This is false, and the Department is not going to entertain Washington gossip while we are focused on major military operations abroad.” Which is also what this regime would say if you asked whether the sky is blue. Still, that doesn’t mean Buria tied one on with Hegseth.
And yet. I note with interest that Buria—who previously embarrassed Hegseth by telling Army Secretary Daniel P. Driscoll never to stand President Donald Trump alongside a Black female at a military event (this according to a March report in The New York Times that Buria denied)—did not, after the Post bombshell appeared on April 3, get his sorry ass fired. Might that tell us Buria and Hegseth share what Trump, circa 2003, called a “wonderful secret,” in this instance about knocking back a few?
I don’t pretend to know the answer. The outrageous financial adventure Hegseth seems to have contemplated is nothing I’d expect a person of even average intelligence to consider. Being stupid would change that calculus, and being desperate would change it more. Being stupid, desperate, and drunk would make an insider trade look maximally plausible. But does plausibility demand the entire trifecta? Recall that the one vice Trump never indulges is consumption of alcohol. He is also nowhere near so stupid as Hegseth, nor as desperate—but look at all the crazy stuff he does!
In any event, it shouldn’t be hard to prove the FT story true, if only someone with subpoena power will take an interest.
