NEW YORK - A broker for US Defense Secretary Pete Hegseth explored a multimillion-dollar investment in defense stocks just weeks before a US-Israel strike on Iran.

The broker at Morgan Stanley approached BlackRock in February about allocating funds into a defense-focused ETF tied to contractors like Lockheed Martin and Northrop Grumman. Such companies typically benefit from rising military spending amid geopolitical tensions and military activity, according to the Financial Times.

The investment did not go through due to Morgan Stanley's platform availability constraints, but the timing is raising scrutiny, given Hegseth's prominent role in shaping US policy toward Iran.

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The Pentagon said the report was incorrect and demanded a retraction.

"This allegation is entirely false and fabricated," Chief Pentagon Spokesman Sean Parnell said on social media. "This is yet another baseless, dishonest smear designed to mislead the public."

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The report came amid a wider scrutiny of trades made in financial and prediction markets ahead of US President Donald Trump's major policy decisions, local media reported.