Return to the Ragged Flagon (not the Guild/Cistern) and speak to Karliah. Agree with backing her up and follow her into the Cistern. After the talk between Karliah, Vex, Delvin, and Brynjolf, follow them to the vault and then speak to Brunjolf after everyone’s discovered what’s going on.
Tell him everything you know about the situation. Now it’s time to break into Mercer’s house. Question him on everything you can two get two optional objectives: He tells you to go talk to Vex about Vald and he tells you to shoot the mechanism to lower a ramp in Mercer’s backyard.
Go talk to Vex and she tells you that you can pay off his debt in order for him not to attack you. Pffft, you can do this if you want to, but it’s really not worth it (see the note below if you want to NOT kill Vald). Go to Mercer’s house backyard and you’ll find Vald out here. Save and pick the lock. Once inside, kill Vald ASAP (really easy) and locate the platform that’s raised. There’s a little cog next to it. Shoot it with an arrow to lower it.
If you opted for the infinitely easier and quicker option; use the key looted from Vald’s corpse and inside kill the three thieves that are guarding the place. Now go to the basement through the northwest corner of the house. There are traps in the sewers, so be careful. At the end, check the table where the marker is. Also be sure to grab the Bust of Gray Fox and the enchanted sword out of the display case…
Read the SNEAK SKILLBOOK here as well (called “The Red Kitchen Reader”) to raise your Sneak level by 1. Also, the bowl here is FULL of jewels. You can continue onwards to go through a short section of the ratway and make your way to the Ragged Flagon. Now return to Brynjolf and the quest ends.