Managed Settings Not Applied When a Stored API Key Was Preferred Over Enterprise Sign-In

Claude Code selected an API key stored by Claude Code, for example from an earlier /login or written directly to its configuration, ahead of the user's valid Claude Enterprise or Team sign-in when fetching the organization's server-managed settings, even though the session itself authenticated with the Enterprise or Team account. When the settings endpoint rejected that stored key, the session started without the organization's server-managed policy (such as permission deny rules, model restrictions and managed-only locks) or, if a previously cached copy existed on the machine, kept applying that stale copy without receiving later policy changes — while continuing to operate as the organization's account. Triggering this required local access to a device with such a stored API key; the no-policy case additionally required that no managed settings had previously been cached. Endpoint-managed (MDM or file-based) settings were not affected. Claude for Enterprise organizations were affected from version 2.0.68; Claude for Work (Team) organizations from version 2.1.38, when server-managed settings became available to them.

Users on standard Claude Code auto-update have received this fix already. Users performing manual updates are advised to update to version 2.1.260 or later.

Thank you to Tamas Voros / NVIDIA AI Red Team for reporting this issue.