You've been expelled. I cannot discuss business with you unless you make amends.

You already brought me the Wakizashi.

Yes, this is the one. Here, take these 500 drakes as a finders fee.

You found the Wakizashi? What did you do with it? Bring it here.

You can keep everything else, but that Wakizashi is mine.

Have you found the Wakizashi?

The ship was trying to land at a secret dock and is likely to be hard to find. I believe they crashed on an island east of Bal Fell. Start there, head due east, and look around the islands you pass. It should be within two or three islands of Bal Fell. The ship was carrying a Daedric Wakizashi when it sank. Bring that Wakizashi to me. You can keep anything else you find there.