Wendy Watson's diamond bracelet was a gift to her from her boyfriend, Tyler Ford. He stated that, watching reruns of Dallas in Panama as a child, he had always fantasized about giving his lady diamonds. The bracelet later becomes a major plot point.
Tyler gives Wendy the bracelet during dinner in the beginning of the episode. He is careful to point out that the diamond is labgrown, and therefore not a conflict diamond. After Wendy is sucked through a quantum singularity into the Mirror Universe, she is forced to give the bracelet to the mirror Middleman to enlist his aid. At the end of the episode, when she returns to the normal universe, she discovers that the mirror Middleman secretly slipped the bracelet back to her.
After the Middleman and Wendy are ambushed at Kerr-Avon Labs, the Middleman orders Wendy and Ida to search the Real-Time Situation Recording Archive and use the HEYDAR to try to discover how their movements are being anticipated. After running a scan, Ida discovers that Wendy's bracelet is rigged with a nano-visual ultra-low frequency surveillance module.
The Middleman and Wendy apprehend Tyler and interrogate him. It is quickly revealed that he did not actually purchase the bracelet; after telling Manservant Neville the same thing he told Wendy (that he had always fantasized about buying his lady diamonds), the next day Manservant Neville gave Tyler the bracelet as a "bonus" for all his hard work.
It is obvious to the Middleman that the true enemy is not Tyler, but Manservant Neville. When Tyler is filled in, he vows to help the Middleman and Wendy bring down Manservant Neville, wishing only that he had known about the Middlemen sooner, so he could have seen the trap before he walked into it.