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I don't know why you're getting an SQL0950... I would've expected an SQL0842, so everything I say in this message may be completely wrong... however:
SQL CLI can only have one connection active in an interactive job.. (Err... this restriction may only apply to the local database, I don't know?) but the point is, if you already have one active connection, and try to create another one, the second one will fail with SQL0842. Which sounds like it matches your description of the problem -- except for the SQL0950 part :)
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