The City of Alexandria notified the head of a newly formed cruise company yesterday that it will stop negotiating with his firm for docking privileges at the city pier because the firm's financial information is "inadequate."

City Cmanager Douglas Harman sent a letter to George Scarborough, president of Nautilus Shipping Lines, informing him of the decision. Scarborough could not be reached for comment.

Last December Scarborough approached Mark Horowitz, an assistant city manager, about the possibility of docking at the city pier a Caribbean cruise ship the firm hoped to acquire.

After newspaper accounts said the city was considering Scarborough's request, a District of Columbia police official informed Horowitz that in 1976 Scarborough had pleaded guilty to a bad check charge, and also had been convicted of interfering with an Internal Revenue Service agent's attempt to conduct an audit of his return.

Last week Scarborough confirmed the police information, stated that he had served 18 months in prison on the cinviction and said he had "paid my debt to society."

Horowitz last week requested detailed financial information about the Nautilus Shipping Lines and International Cruise Lines, both of which Scarborough heads. Horowitz said yesterday that Scarborough had failed to submit as requested income tax statements, a certified assets and liabilities statement and information about previous activities by the two firms.