Does this happen with every feed? Or just one particular feed? It might be the feed itself. You can use $item->get_content() and look at the content of the feed directly if the description itself is proving problematic. Sometimes it is necessary to do processing on information from a feed or web API, there is PHP code and examples for stripping and replacing characters, the News Blocks 2.0 demo on the SimplePie site has some cleaning code I've been using a lot recently.
Good luck.
