The Burning Blade in Thunder Axe Fortress to the east is rumored to have acquired the Sceptre of Light from the Naga. Legend tells that the sceptre is able to sink entire cities under the great seas.
This item drops from Burning Blade Seer in Desolace.
Sceptre of Light as a quest objective
This item is an objective of  Sceptre of Lightω τ ϖ.