Nerk can be found standing guard outside the Black Market trapdoor on Lanilor Lane in Aleroth (near the Playhouse & across the road from Madame Eve's) during the events of Divinity II: Flames of Vengeance.
Nerk can be mindread to learn that a person named Dormen is expected at the market, which allows you to talk your way in: "Where is that bloody Dormen? I've been waiting for the merchandise for a week now! Verdistis is rather far away, but the blasted lazybones should have made it before that wizard fellow put up the shield!"
After mindreading him you can claim to be Dormen, here for some "special business." This lower his prices, and causes Nerk to unlock the trapdoor allowing you to enter the Black Market (you need to do this for the quest A Hunting We Shall Go Once More).
Upon leaving the market you'll witness a confused Nerk being confronted by the real Dormen, who he accuses of being a Champion spy and threatens to slit his throat.
After killing Mysus for A Hunting We Shall Go Once More, Nerk asks about the noise. If say that you were gambling and were accused of cheating, he'll laugh it off. If you admit what occurred down there, he'll attack you.