The commission ordered distributor Maxfield and Oberton Holdings of New York to halt sales because injuries to children who had swallowed them had continued to rise, the CPSC said in a complaint.

"Notwithstanding the labeling, warnings and efforts taken by (Maxfield and Oberton), ingestion incidents continued to rise because warnings are ineffective," the CPSC said. It said the magnets presented a "substantial product hazard."

Buckyballs are small, powerful round rare earth magnets that are sold as toys and desktop accessories. When children swallow them they can pinch or trap intestines and require surgery to remove, the CPSC said.

Since they went on the market in 2009, numerous incidents involving children have been reported. In January 2011, a 4-year-old boy had his intestine perforated after he swallowed three magnets he thought were chocolate candy, the complaint said.

Although the commission issued a safety alert in November, it has received more than a dozen reports since then of children ingesting the magnets, with many requiring surgery, it said.

More than 2 million Buckyballs and at least 200,000 Buckycubes, a similar cube-shaped magnet, have been sold in the United States. They were made in China, the complaint said.

Maxfield and Oberton must cease importation and distribution of the magnets and issue refunds as part of the ruling, according to the panel's complaint. The company must also tell retailers to stop distributing the toys.

Maxfield and Oberton founder and Chief Executive Craig Zucker said his company marketed the magnets to adults and teenagers and the CPSC held the "absurd position" that warnings did not work.

"We will vigorously fight this action taken by President Obama's handpicked agency," he said in an emailed statement.

A CPSC spokesman said the stop-sale order was the first by the commission in 11 years.

(Reporting by Ian Simpson; editing by Todd Eastham)

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